John Prescott congratulates Tony Blair at this year's party conference

A special Labour conference in mid-February and a Budget almost certain to take place on 6 March seem set to be the springboard for the party's bid for a second term.

News of the conference, together with confirmation that Gordon Brown will add about £12 per week to family budgets with the introduction of the children's tax credit in April, all point towards 3 May as Tony Blair's preferred election date.

The Labour machine is reported to be gearing up for that date, which is also the date for local elections.

The bookmakers William Hill are reporting that May 2001 remains the favourite - at 8/15 odds-on - despite speculation in a national newspaper that March was the government's preference.

The overall balance of the chancellor's package will be fiscally safe

Treasury source

The bookmakers said odds on a March election were slashed from 50/1 to 6/1 in the wake of the article, but March remained third favourite, with April second at 13/8.

6 March Budget

The Treasury is said to be increasingly convinced that Chancellor Gordon Brown, who is also in charge of the election campaign, will want 6 March for the Budget to make sure there are no interest rate rises in the run-up to polling day.

The strongest signal pointing to this date is the meeting of the Bank of England's Monetary Policy Commitee, which sets interest rates, scheduled for 7 and 8 March.

The MPC will receive an advanced briefing on the Budget measures to help it in its deliberations.

Gordon Brown is certain to make his package sufficiently prudent for them not to raise interest rates as election day nears.

A Treasury source said: "No chancellor wants to see rates going up after an election has been called.

"The Bank will be brought into his confidence and you can be absolutely sure that whatever rabbits he pulls out for the electorate the overall balance of his package will be fiscally safe so that they do not feel the need to raise rates in March or April."

Showcase conference

Labour strategists have rolled four separate party gatherings - on local government, women, youth and Europe - into one special conference, which will be held in Glasgow from 16 to 18 February.

This will be the biggest party event outside the annual conference. It is thought it will serve as a showcase for Labour's policies, though a party spokesman said linking it to an election timetable would be speculative.

Tony Blair, Gordon Brown, John Prescott and David Blunkett are due to address the conference, with the election manifesto itself coming at a later date.